Today's Headlines

Bloomberg:

- The 17-month U.S. stock market decline may be at or near an end after investors exhausted their will to sell, according to Tobias Levkovich, the chief U.S. equity strategist at Citigroup Inc. Investors withdrew $8.4 billion from stock funds, including Exchange Traded Funds, in the week ended March 11, according to AMG Data. The selling is a sign they have given up hope for a rally and a contrarian signal that stocks may advance, Levkovich said. “We are seeing many of the classic signs of a capitulation,” Levkovich said in an interview with Bloomberg Radio. “We’ve gotten anecdotal evidence that individual investors are throwing in the towel, telling their brokers ‘Sell me out.’” Levkovich expects the S&P 500 to rally 33 percent from yesterday’s close of 753.89 to 1,000 by the year-end.

- President Barack Obama’s economic team finally found its voice -- and it belongs to Federal Reserve Chairman Ben S. Bernanke. Bernanke’s March 15 appearance on CBS Corp.’s “60 Minutes” -- the first televised interview by a Fed chief since 1987 -- gained praise from experts who drew a contrast between his defense of government efforts to fix the financial system and the sometimes-floundering efforts of Obama’s top economic aides to explain to the public what they were doing, and why. “I have been waiting for months for someone in authority to give a straight-talk speech to the American people about how we got into this mess and how we’re going to get out of it,” said Alan Blinder, a former Fed vice chairman who is now a professor at Princeton University in New Jersey.

- Nucor Corp.(NUE), the largest U.S. steelmaker by market value, fell the most in three months in New York after revising its first-quarter forecast from a profit to a loss because of lower-than-expected demand. Nucor fell $4.26, or 12 percent, to $32.69 at 10:59 a.m. in New York Stock Exchange composite trading. A close at that price would be the biggest one-day drop since Dec. 1. The shares declined 20 percent this year through yesterday.

- Venezuela, holder of the world’s second-biggest oil reserves, increased its proved reserves by 14 percent last year, edging closer to leader Saudi Arabia.

- Crude oil rose on optimism about the U.S. economy after a report showed that housing starts in the world’s biggest energy-consuming country surged in February. Prices climbed as much as 3 percent after the Commerce Department report showed that work began on 583,000 homes at an annual rate, a 22 percent increase from January.

Wall Street Journal:

- The Real AIG Outrage. President Obama joined yesterday in the clamor of outrage at AIG for paying some $165 million in contractually obligated employee bonuses. He and the rest of the political class thus neatly deflected attention from the larger outrage, which is the five-month Beltway cover-up over who benefited most from the AIG bailout. Taxpayers have already put up $173 billion, or more than a thousand times the amount of those bonuses, to fund the government's AIG "rescue." This federal takeover, never approved by AIG shareholders, uses the firm as a conduit to bail out other institutions. This includes at least $20 billion to European banks. The list also includes American charity cases like Goldman Sachs(GS), which received at least $13 billion. This comes after months of claims by Goldman that all of its AIG bets were adequately hedged and that it needed no "bailout." Why take $13 billion then? This needless cover-up is one reason Americans are getting angrier as they wonder if Washington is lying to them about these bailouts. The politicians also prefer to talk about AIG's latest bonus payments because they deflect attention from Washington's failure to supervise AIG. The Beltway crowd has been selling the story that AIG failed because it operated in a shadowy unregulated world and cleverly exploited gaps among Washington overseers. Said President Obama yesterday, "This is a corporation that finds itself in financial distress due to recklessness and greed." That's true, but Washington doesn't want you to know that various arms of government approved, enabled and encouraged AIG's disastrous bet on the U.S. housing market. Scott Polakoff, acting director of the Office of Thrift Supervision, told the Senate Banking Committee this month that, contrary to media myth, AIG's infamous Financial Products unit did not slip through the regulatory cracks. Mr. Polakoff said that the whole of AIG, including this unit, was regulated by his agency and by a "college" of global bureaucrats. It is on Mr. Liddy's watch that AIG has lately been conducting a campaign to stoke fears of "systemic risk." To mute Congressional objections to taxpayer cash infusions, AIG's lobbying materials suggest that taxpayers need to continue subsidizing the insurance giant to avoid economic ruin. The Washington crowd wants to focus on bonuses because it aims public anger on private actors, not the political class. But our politicians and regulators should direct some of their anger back on themselves -- for kicking off AIG's demise by ousting Mr. Greenberg, for failing to supervise its bets, and then for blowing a mountain of taxpayer cash on their AIG nationalization. (very good article)

- A broad series of changes at Starbucks Corp.(SBUX), from instant coffee to new menu boards that leave off drink prices, show how the company is adjusting its upscale formula to the economic downturn. Investors hope to learn Wednesday whether the moves are working, when Starbucks conducts its annual meeting in Seattle.

- Florida Tourism Industry Suffers as Businesses Cancel or Scale Back Events in the Sunshine State. Luxury resorts are accustomed to unusual requests. But Amelia Island Plantation was surprised to get this one from a corporate event planner worried about a function appearing too extravagant: could the resort drop the word "island" from its address? Another potential client said it wouldn't consider any hotel with the words "spa" or "resort" in its title. A construction trade association canceled its 400-person annual convention at the resort scheduled for June, citing similar worries. For tourism officials in Florida, the drop-off at Amelia Island Plantation is an ominous sign that the tourism industry, the state's lifeblood, is in for a brutal year. Executives at the resort say they have lost about $750,000 in revenue since January, as businesses and trade groups shun the negative publicity associated with anything even remotely resembling a boondoggle. In the final quarter of 2008, the number of out-of-state visitors to Florida dropped 13.6% from a year earlier, the largest quarterly decline since the quarter following the Sept. 11, 2001, terrorist attacks. "We're hoping that eventually this hysteria goes away," said Visit Florida's Mr. Goldman, who is also the ocean resort's chief marketing officer. The resort's entire salaried staff recently took a 20% pay cut. The loss of business has rippled throughout the island's economy. Four restaurants on the island have closed in the past three months, Mr. Langley said.

- Financial institutions that are not large enough to be designated as systemically significant will gradually lose out in the marketplace to the larger companies that are perceived to have government backing, just as Fannie and Freddie were able to drive banks and others from the secondary market for prime middle-class mortgages. A small group of government-backed financial institutions will thus come to dominate all sectors of finance in the U.S. And when that happens they shall be called by a special name: winners.

CNBC.com:
- Live Blog: iPhone 3.0 Set for Release.

NY Times:

- Goldman Sachs(GS) got its bailout. Now some of its bankers, those aristocrats of Wall Street, apparently need a bit of a bailout too. Goldman, which accepted billions of taxpayer dollars last fall and, as learned Sunday, was also a big beneficiary of the rescue of the American International Group, is offering to lend money to more than 1,000 employees who have been squeezed by the financial crisis. The loans, offered via e-mail last week, could range from a few thousand dollars to hundreds of thousands. Properties like the Helmsley building, which Goldman helped purchase in 2007, have nose-dived in value. Stuart Rothenberg, the former head of Goldman’s real estate group, warned just before he retired last year about Goldman’s real estate exposure and said Goldman became “for all intents and purposes, almost an enlarged hedge fund,” according to Reuters.

ValleyWag:

- In the annals of vetting, this will go down as the most laughable miss ever: Vivek Kundra, the D.C. official tapped by Obama to run government technology, pleaded guilty to a theft charge in 1997. Kundra is currently suspended from his White House job as Yusuf Acar, a manager in the D.C. office Kundra headed, faces bribery charges unrelated to Kundra's 12-year-old theft.

Seeking Alpha:

- Could the Housing Market Be at a Bottom?

- Here's an excellent explanation of the problems with mark-to-market accounting from William Isaac, in recent testimony to a House financial services committee. Isaac knows of what he speaks, being the former chairman of the FDIC. HT: Bob McTeer's blog. Amidst all the gnashing of teeth and wringing of hands, we tend to forget that the maximum losses from subprime loans could have been easily absorbed by the global financial system. Because of MTM, the write-downs and capital losses have been orders of magnitude more than they should have been.

NY Post:

- Recent moves by the Securities and Exchange Commission to tighten its grip on so-called registered investment advisers (RIAs) is being viewed as a possible precursor to mandatory registration of hedge funds, industry watchers said. As the SEC steps up its enforcement in the wake of embarrassing missteps involving convicted Ponzi-schemer Bernard Madoff, the agency has tightened rules surrounding audits of RIAs - commonly known as money managers - under its purview. In order to improve its audits and investigations, the SEC now plans to independently verify the information given to it by RIAs with information from independent third parties, including auditors, accountants and even investors.

The Washington Post:

- A Pennsylvania defense research center regularly consulted with two "handlers" close to Rep. John P. Murtha (D-Pa.) as it collected nearly $250 million in federal funding through the lawmaker, according to documents obtained by The Washington Post and sources familiar with the funding requests. The center then channeled a significant portion of the funding to companies that were among Murtha's campaign supporters.

The Detroit News:

- A top adviser to the Obama administration's auto task force warned that the government won't provide indefinite financial support to the struggling auto industry, while saying the group had made no decision on whether to approve a Chrysler tie-up with Fiat SpA. "We're not going to put these companies on some kind of indefinite intravenous drip feed of money," Steve Rattner told The Detroit News on Monday.

USAToday.com:

- Used car salesmen are becoming the kings of the lot as demand for such vehicles is starting to rise. While new car sales continue to fall, many dealers are finding buyers are willing to spring for a good used car instead. The volume of used cars sold through dealers rose 3.1% in February compared with last year, the first year-over-year increase in 12 months, reports CNW Marketing Research.

Reuters:
- China's official foreign exchange reserves recorded their biggest monthly drop in at least nine years in January, a source familiar with the situation told Reuters on Tuesday. The source, who asked not to be identified, declined to say exactly how big the drop was. But he said provisional figures showed it was greater than the $25.9 billion fall last October, a decline that surprised markets by its magnitude. The source said the decline partly reflected the rise in the dollar due to safe-haven demand and repatriation of funds by banks, companies and investors hit by the financial crisis. If there has, however, been a sustained outflow of capital from China, then the drop in reserves could turn even sharper in February, when the country's trade surplus shriveled to $4.84 billion.

- General Electric Co. (GE) may live to regret ill-timed investment raids on the European real estate market, that are now one of the major headaches for the U.S. conglomerate's GE Capital financial arm. GE Capital has spent billions of dollars on real estate in Eastern and Central Europe between 2005 and 2008, becoming one of the heaviest spenders on the sector late in the property cycle, just when prices were peaking.

The Guardian:

- Google(GOOG) is ramping up its efforts to make money from its controversial Google News service by striking deals with eight European news agencies, and launching a contextual ad service to display adverts around their stories. Google said today it had struck news content hosting deals with news agencies EFE, which services Spain and Latin America; LUSA, across Portugal and Brazil; Switzerland's Keystone; APA in Austria; Poland's PAP; MTI in Hungary; ANA in Greece and Belga in Belgium.

AFP:

- Cuba’s oil reserves in its portion of the Gulf of Mexico “continue increasing,” citing Yadira Garcia, the island nation’s minister for basic industries. Cuba may have 21 billion barrels of probable oil reserves, including onshore and offshore discoveries.

Arab News:
- Saudi Arabia hasn’t changed its investment and spending plans because of the global credit crunch, citing King Abdullah.